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Risk Horizon data under the spotlight – Water Stress

According to the UN, approximately two billion people worldwide don’t have access to safe drinking water today, and roughly half of the world’s population is experiencing severe water scarcity, which refers to the physical abundance of fresh water for at least part of the year. With climate change and water being intrinsically linked, water issues and the associated impacts are only likely to grow stronger without significant management.

Water stress is a commonly referred to phenomenon when discussing water scarcity and refers to the ability to meet the demand for freshwater in a given area. According to the European Environment Agency (EEA), water stress occurs when ‘the demand for water exceeds the available amount during a certain period or when poor quality restricts its use’ and is often referred to as ‘demand-driven scarcity’. With extreme weather conditions such as flooding and droughts already becoming more regular occurrences due to climate change, areas experiencing water stress are predicted to increase significantly in years to come. UNICEF predict that by 2040, roughly one in four children worldwide will be living in areas of extremely high water stress, and states that as well as flood and drought risks of water stress, other risks such as increased exposure to water-borne diseases and failing sewage infrastructure also pose a significant and growing threat. As a result, it is now more important than ever to consider how water resources can be managed effectively in order to reduce unnecessary water use and subsequently reduce the impacts.

This need to manage water use is recognised by many global corporations and governments, with the EEA stating that approximately 20 laws on water are now in place across Europe alone. Many companies that operate in water-stressed areas have started to introduce policies and initiatives aimed at improving water use efficiencies, including water recycling in manufacturing and reducing the volume of water withdrawn during operations. However, despite an awareness of the problem and a number of laws in place, as well as this willingness from companies to address water issues, the EEA argue that water laws need to be ‘harmonised, updated and integrated so that the links between the quality and quantity of water can be better managed’.

However, steps have been taken in recent years which have made the monitoring and tracking of water stress more accessible. A notable example of this comes from the World Resources Institute, which released its ‘Aqueduct 4.0’ dataset in August 2023. Regarded globally as a leading source of data and water insights, World Resources Institute data has reached ‘hundreds of thousands of users across the globe and has informed decision-makers in and beyond the water sector’. The data has been revised in the 4.0 version, which has been uploaded in a recent data update to Landmark’s RiskHorizon platform (Baseline Water Stress), and now includes future projections for 2030, 2050 and 2080 based on the latest climate models. The data shows that much of Europe, and indeed the world, is experiencing some level of water stress, further demonstrating the need to manage water use in these areas.

To conclude, with climate change and water intrinsically linked and projections indicating that water-stressed areas are going to increase, there is a clear and urgent need for governments and companies to recognise the growing threat that water stress poses and take steps to manage this. With ESG screening tools such as Landmark’s RiskHorizon platform able to utilise such data and display geographical differences in water stress globally, this demonstrates a positive step forward in accessibility and understanding of water stress-related risks. In addition, it is encouraging that governments and global corporations have started to recognise the risks posed by water stress, resulting in monitoring and management of water use in at-risk areas. However, as argued by the EEA, laws and policies must now be aligned to work together to better manage water use in order to truly address the ever-increasing risks. Ultimately, despite the growing awareness of these issues and their causes, it is clear that there is much progress still to be made with regards to effective management of water in order to prevent further decline, as predicted.

Article originally published by Landmark Information Group.

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